Trading the stock markets in short time frames can be both an exciting and a dangerous endeavor.
High speed internet connections, an overabundance of information, often contradictory and always open to subtle interpretation, and the ready availability of systems and gurus to help you make sense of it all conspire to offer the new trader so many ways to go wrong. Making consistent, disciplined and effective meaning out of the flood of information will lead a trader to the land of consistent, disciplined and effective profits.
Failure to solve the problem of information overload will inevitably lead to disaster. Trading without a plan will eventually and certainly lead to disappointment.
Cognitive scientists and psychologist have identified the ability to reason through the use of metaphor and analogies as one of the most powerful tools in our mental kitbag. A powerful, compelling metaphor can help a trader adopt and adapt a set of profitable behaviors that can lead to survival and then profit in all market conditions.
If a trader can adopt a satisfying metaphor, she will have a mental schema that will allow here to trade in a natural way, to receive, process and adapt to information in an effective, routine way, and help guard against being overwhelmed by information.
Here is a simple example to make this point.
Consider trading to be like fishing. On a daily basis a fisherman goes to the lake, baits the hook, casts hook and bait into the water and if she knows her business, she will start pulling in the kinds of fish she is looking for. The fisherman can bait her hook, but can’t really jump into the water and chase the fish onto the hook, or force it into their mouth.
That would be very much like a once-disciplined trader who is frustrated and tries to make the market perform in a certain way. If you are a frustrated band trader, you shouldn’t be tempted, in the moment, to chase breakouts. Remember sometimes the fish just aren’t biting.
Play your odds, don’t fall into the lake, know your fish, bait your hook properly.
Choose your metaphors wisely trader!